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How World’s top banks including Lloyds TSB laundered money for Iran?

By Amarendra Bhushan for CEOWORLD Magazine Updated:January 12, 2009

According to a deferred prosecution agreement, Lloyds handled $300 million of Iranian transfers and $20 million of Sudanese transfers that ended at U.S. banks. Morgenthau said billions of dollars of transactions went through American banks but ended outside the country. The United States has reportedly launched an investigation into nine European banks to find possible violations of sanctions on Iran.

The move came after some speculation about the possibility of the transfer of Iranian money into the American banking system by European banks.

The Financial Times quoted Manhattan District Attorney Robert Morgenthau as claiming that US investigators discovered evidence showing that Iranian interests were trying to buy material, including tungsten, for producing long-range missiles.

“There was an order for 30,000 metric tons of tungsten that would take care of every refrigerator in the Middle East and then some,” Morgenthau told the paper on Sunday.

Morgenthau declined to reveal the names of the banks, saying that the investigation is ongoing.

Israel and its top ally, the United States, accuse Iran of making efforts to build nuclear arms.

The UN agency monitoring the Iranian program says unless Tehran increases its nuclear cooperation, it “will not be able to provide credible assurance about the absence of undeclared nuclear material and activities in Iran.”

The agency, however, confirmed in its November report that it has “been able to continue to verify the non-diversion of declared nuclear material in Iran.”

According to the UN nuclear watchdog, Tehran has managed to enrich uranium-235 to a level “less than 5 percent.” The rate is consistent with the development of a nuclear power plant. Nuclear arms production, meanwhile, requires an enrichment level of above 90 percent. Lloyds TSB Bank, accused of giving Iranian and Sudanese businesses illegal access to the US financial system, will pay $350m to settle an investigation by US authorities.

Lloyds admitted it altered wire transfer information to hide the identity of clients, Manhattan district attorney Robert Morgenthau said on Friday. The bank must provide financial information on the transactions, according to a deferred prosecution agreement.

Charges can still be pursued if the bank knowingly transmitted funds to or from terrorists.

The bank falsified business records by altering wire transfer information to hide the identity of the clients, Morgenthau said in announcing the agreement.

“This is the largest penalty by far for a violation of US sanctions,” Morgenthau said. He said $350m in the funds sent by Lloyds terminated in the US and “several billion” dollars went through US banks in violation of US law.

Prosecutors said US banks had software filters to look for entities barred from doing business in the country. Lloyds stripped out identifying features so the filters would not catch them, they said.

The transactions appear to be from Lloyds rather than, for example, Iranian Bank Melli and its customers.

“Why would Lloyds do this?” Morgenthau asked. “I think the answer is banks want deposits.” Lloyds admitted it laundered €300 million and agreed to pay a €350 million fine and open its books to investigators. If records show that the bank knew it was helping Iran break international law or foster terrorism, Lloyds could face criminal prosecution, authorities said. None of the other nine banks was identified because they are working out similar agreements with Morgenthau’s investigators. The CIA will also review the bank records.

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